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Nonprofit Turnaround:
From Struggle to Success
Excerpts from Nonprofit Turnaround: A
Guide for Nonprofit Leaders, Consultants &
Funders; 2010
by Jan Glick
© Copyright 2010 by Jan Glick & Associates
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Research Methodology
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• National Research Project – first of its kind to
investigate nonprofit turnarounds across all
nonprofit sectors
• Interviews with 23 turnaround leaders: Interim
EDs, Permanent EDs, consultants, funders,
others
• Interviewee experience represents over 111
turnarounds, from all-volunteer agencies up to
several with budgets over $10M
© Copyright 2010 by Jan Glick & Associates
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What is a Turnaround?
Most common characteristics of serious
trouble:
– Obsolete mission
– Extremely weak financial position
– Severe problems with the business model itself or its
execution
– Serious problems with people and communications
One of these is a serious problem; 2 or more
signify crisis
© Copyright 2010 by Jan Glick & Associates
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You Are Not Alone
At least 25% of nonprofits face these sorts
of problems and most leaders interviewed
in 2008 felt the number was higher yet….
And that was prior to the Great Recession!
Here is why……
© Copyright 2010 by Jan Glick & Associates
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Sectoral Factors
•
•
•
•
Small scale
Doing more with less
Regulatory constraints
Chronic underinvestment in capacity building
and training
• Low executive compensation
• Extreme changes in the financial environment
© Copyright 2010 by Jan Glick & Associates
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What is a Turnaround?
Organizational
Effectiveness
and Capacity
Mild
Decline
Stabilization
Sustained
Positive
Performance
© Copyright 2010 by Jan Glick & Associates
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Definition of a Turnaround
Following extreme financial distress
and/or operational collapse, the
significant and sustained
improvement in a nonprofit
organization’s financial and
programmatic performance
© Copyright 2010 by Jan Glick & Associates
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Most….
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Nonprofit declines and crises are
caused by factors within
management control
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Anatomy of a Turnaround
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It takes courage…
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…for the board to recognize the depth
of crisis and initiate a turnaround
process
© Copyright 2010 by Jan Glick & Associates
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The Board’s Top Priority
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When faced with a turnaround
situation, after summoning the
courage to act, the board’s top
priority task is to establish the
leadership team to guide the effort.
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Staff Leadership
• Find leaders, especially an Executive
Director, with relevant turnaround
experience
– Interim Executive Directors
– Consultants
– Permanent EDs – some can be found with
turnaround experience, but…..
© Copyright 2010 by Jan Glick & Associates
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The Situation Must Be
Described In The Search
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• If hesitant to fully disclose situation, or that
seeking someone with turnaround
experience in public, can say:
– “Seeking someone who has led significant
organizational change processes, including
one or more of: organizational restructuring,
cost-cutting, and overhaul of internal
systems.”
© Copyright 2010 by Jan Glick & Associates
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The Turnaround Process
What to expect and plan for
© Copyright 2010 by Jan Glick & Associates
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Diagnosis Processes
• Success requires a solid situation
assessment: Individual interviews with board
and staff required; helps assess culture and
communications
• Accurate assessment of financial position is
critical: Use whatever means are necessary to
determine financial position and strength of the
organization and each department/program.
Financial data must be presented for strategic
decision making.
© Copyright 2010 by Jan Glick & Associates
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Diagnosis Processes
• Interim EDs and consultants: Complete
enough of assessment in 30 days to allow
initial triage steps begin. Permanent
executive directors may take somewhat
longer.
• Assessment builds buy-in from board and
staff, brings in new thinking and
perspectives from stakeholders, builds
teamwork and a culture of reflection.
• Assess organizational culture from outset,
model open, honest and regular
communications with board and staff.
© Copyright 2010 by Jan Glick & Associates
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Initial Triage Steps
• Once far enough along in assessment,
(30 days +/-), be prepared to make
initial triage steps, including reexamining the mission, making changes in
positioning and/or branding, starting to
divest or scale back ineffective programs,
terminating ineffective employees and
fixing internal systems.
© Copyright 2010 by Jan Glick & Associates
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Improving Culture & Communications
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• Most significant problem in virtually all
crises/turnarounds
• Strive to establish new culture based
on:
– Performance management
– Open, transparent, frequent communications
– Teamwork
© Copyright 2010 by Jan Glick & Associates
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Address Cultural Obstacles
• Ineffective mindsets: Can’t make a
“profit,” can’t spend on capacity building,
all decisions must be consensus
• Organizational, board/staff conflicts,
issues have been personalized
• Staff emotionality regarding rapid
assessment and change especially when
programs are cut or changed & if staff
turns over
© Copyright 2010 by Jan Glick & Associates
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What is a Business Model?
© Copyright 2010 by Jan Glick & Associates
Fix Business Model Elements
Corporate Structure
and Board of Directors
Mission
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Possible
broken
model
Possible
broken
model
© Copyright 2010 by Jan Glick & Associates